MAN truck profits plunge

Financial performance data released by German heavyweight MAN SE reveals that profits plunged at the group's core commercial vehicle business last year.

Operating profit for MAN Truck & Bus fell by 37.7 per cent last year, from Euro 244 million in 2013 to Euro 152 million, as the division struggled with difficult economic conditions in Europe and Brazil.

MAN Truck & Bus also experienced a softening in terms of order intake (down 3.0 per cent) and a sharp drop in sales revenue (down 9.1 per cent), while its operating return on sales contracted from 2.6 per cent to 1.8 per cent.

Those figures are relatively benign, however, compared to last year's performance of MAN Latin America, Brazil's largest truck manufacturer.

That division's operating profit fell by a staggering 70.5 per cent last year compared to 2013; order intake and sales revenue also dropped appreciably, while its operating return on sales fell from 7.4 to 2.9 per cent.

The losses were, however, offset by significant gains made by MAN Diesel & Turbo, and Renk – the group's gear unit and transmission specialist.

Overall, the MAN Group still managed to post an operating profit last year of Euro 384 million, up 24.3 per cent from the previous year, while its order intake and sales revenue fell by five per cent and 10 per cent respectively.

Speaking at a recent press conference, the Chief Executive Officer of MAN SE, Dr Georg Pachta-Reyhofen, said Europe would continue to underpin the company's stability while it continues its investment in emerging markets.

"In spite of stepping up global activities, Europe will always remain our backbone," he said.

"We have profited from this development: in view of the unfavourable framework conditions – especially in important markets such as Russia and Brazil – our result in 2014 was satisfactory."

News agency Reuters reports that Dr Reyhofen announced a wide-ranging raft of cost-cutting measures that will be implemented across the business, potentially saving over Euro 600 million by 2017.

Dr Reyhofen, who offered no details on what form this new cost-cutting program might take, said previously introduced measures were already making their presence felt.

"Expenditures are a particular focus in financially difficult times and we are now benefitting from those cost savings that we made in the past," he said.

"In addition, our competitiveness is already being boosted by the procurement synergies stemming from our membership of the Volkswagen Group."

Dr Reyhofen told Reuters "it's indisputable that one needs to create and must create a truck alliance" at the conference, hinting at maximising synergies between MAN Truck & Bus, sibling Scania and parent Volkswagen.

Volkswagen recently appointed former Daimler executive Andreas Renschler as a member of its board responsible for commercial vehicles, strengthening its leadership team and paving the way for greater synergies between MAN and Scania, as it takes on the might of major trucking adversaries Volvo, Daimler and PACCAR.

MAN SE predicts its performance in 2015 will remain steady, with further slight falls in the truck and bus division expected once again to be offset by gains in its power engineering division.

Click here to view the full 2014 MAN Group financial report.